Lulu's Fashion Lounge (LVLU) 8 Aug 232023 Q2 Earnings call transcript

Good afternoon and welcome to Lulu’s Second Quarter 2023 Earnings Conference Call. Today’s call is being recorded and we have allocated 1 hour for the prepared remarks and Q&A. At this time, I’d like to turn the conference over to Lulu’s General Counsel and Corporate Secretary, Naomi Beckman-Straus. Thank you.

You may begin.

thank XXXX joining results. and Lulu’s to everyone quarter second afternoon, you us for discuss Good

including objectives statements limited estimates of which Before call. facts of of of our website which remind this and and statements results; the our achievements Act expressed call to conference represent opportunities, press statements, forward-looking factors by market goals our that from for filed their all forward-looking on with XXXX, found growth. actual the These you strategies, release, forward-looking X, implied or begin, of could annual should as implementation; well that the on December for with the to, performance and we we report around important plans, XX, investors.lulus.com. made expectations, but of date and relate launches year including, statements. be SEC, XXXX, at this regarding other as performance are uncertainties references January be product call ended management’s the or business; such would expectations and continued XXXX. ending on results, our outlook the the filings year assumptions full on management’s All results, do These will risks, macroeconomic cause fiscal this Any XX, our Form XX-K other can these to considered initiatives regarding March our on Litigation not SEC are various differ in year Private uncertainties, and statements, or and our assumptions risks, detailed historical achievements subject Securities the as financial our the like statements materially afternoon’s expectations statements future environment, to return XXXX, within XXXX; not of to Reform meaning this financial impact including include consumer demand rates matters to our

no revise While in to update by to except forward-looking obligation any statements such some required we update elect information, may forward-looking at or as point law. or we undertake the future, statements

presented today, cash debt will use information, adjusted We discussions financial non-GAAP in non-GAAP EBITDA, or free financial GAAP. net operational and performance they non-GAAP financial of The EBITDA the of or financial measures the business. to results with During is substitute also to we reference and we for intended underlying our not isolation accordance of this flow. margin, including as accurately true as and superior our information more in be our call certain considered presentation believe a represent prepared information adjusted some in

be non-GAAP can non-GAAP as measures measures, used measure, be Reconciliation and well of by rationale this found in to SEC afternoon’s press limitations for may in measures from release and each GAAP as different non-GAAP description, companies. the our other Our filings.

the our our are our on Tiffany Landsem; today CIO, Chairman, CEO, Crystal me call Joining and Vos; President CFO, and Executive McCreight. Mark David our Smith;

your we’ll remarks, our Following the prepared for questions. open call

Crystal. the over turn I’ll that, to With call

us today. joining Thank you, for everyone. Thank afternoon, Naomi, good you and

for brand our efforts into like fans. I’d tireless to best I team delivering and jump Before thank experience our brand our our results, to to building dedication the and their

softer environment XX% the million, in we a to of fell observed During we challenging representing stabilization to disappointing consumer consumer a compared many the results. decline demand revenue Similar the to first demand. line the QX short quarter. of second of specifically, our continued to was from led forecast, and XXXX, leading of at to expectations worsened QX $XXX rates XXXX. macro the compared quarter More continuation return signs others, experienced second the the like choppiness our of a quarter, early Top demand, shift beginning

last following faced also events, in growth We tough XXXX. half we from XQ a XQ, comparisons the revenue year-over-year first where in XX% return to net year’s of saw benefit the

million million QX $XX returns. was line EBITDA for XXXX adjusted top $X.X and in compared due QX Our demand higher to to XXXX, lower primarily

continue and and promotional optimizing to focused surgical believe products. with promotions and and sales the balanced of more for our us. in health markdowns around spite on reinforces attainable the longer-term of be environment high-quality are for best a normalized to We highly is promotions pricing We approach full-price brand, the it

our long-term shortfall with our quarter, We in weather opportunities our continued believe uncertainty. growth debt. and that, to operating revolver, strong, continue the from sheet investing capital-light model, no Despite balance the long-term remained in us and macro well aside along includes positions

by the by quarter operating our in $XX improvement second used of Net XXXX activities operating million cash showcasing of quarter to of million cash the provided the roughly second million a of net XXXX, business activities compared in year-over-year, was flexibility model. $X.X $X.X

QX X.X at count X% down Our from was XXXX, the end from last million active year. and customer X% of QX XXXX QX down

are resume profitability conditions we in our of term. double-digit While enable strong long challenges, over vision goal and the weather the our and confident that and macroeconomic current storm belief growth near-term ultimately the to foundation present will strategic our us best-in-class

Thanks operations. driving where health on sheet, closely our which allows further the volatility, lean others to balance across reinforce an are attainable an of to we to the we as in by brand. efficiencies in view and our lifestyle near-term as investing remain Given to our us continue pulling luxury managing costs environment this opportunity Lulu’s brands back, focused

initiatives making benefit great optimization on that will term. key are brand we We our believe long several progress

to our our product First, last teams we were that quarter, we build highlighted leverage buying scale. to starting better out costing

add our towards we margin to and which reduction substantial prioritize expansion capabilities building pleased evaluate result and will margin initiatives, long benefits to term. are through in product the our out cost continue progress further believe over team We product with

Next, realize the creative location of Southern we continue office. of to benefits a our to adjacent moves buying our studio recent the to California

future conversion confidence gives product our seen collaboration, we’ve new us result of that in a As pipeline. product the stronger reorder

strength well, bridesmaids new reorder performing a special are we during in new the new product are where separates. that and adoption We particular, build can In to we occasion, by saw rates. funnel improve on further QX, encouraged styles

we quarter, the insights and technology also functionality investments During data around product returns. added and made

seeing in we to many are and we’ll to BXC continue mitigate return and been ways invest returns, by we’ve while retailers, customer product impacted also loyalty. across increasing As satisfaction costs, preserving

been several networks. reduces rates also enhances of our global undertaken the from leverage of our This single carriers, to a one the factors. Third, to but and enables with diversification broader our further range of market key able multiple By shipping seeking initiatives over costs optimizing last the ways our we’ve continuously is options, quarters experience. we’ve that adapt better times, a customer arise carrier external and carrier, on delivery to continued to and improve navigate dependencies may strictly ability us disruptions changing not to approach only dynamics partnering

customer initiatives, and to our we and we forward new engagement how she to changing driving efforts consumer accelerated are strategies. addition second customer behaviors our the In optimization quarter, where shops. meet In adapt to

our the and second half of as the we growth, strengthen driver towards a for new key strategies Looking have year, engage remain We providing additional new that to seeking with of with our to shown channels visibility connect on insights explore channel continue our future focusing they our to digital customer committed to our ways are with us. brand, and success. opportunities customers

in in activations to from retail Angeles that strategy visibility very explore to in-person break Los taking part July, lease of post-COVID, in opportunities, Avenue announce new and a we to person. signed on a as Melrose customers After to are engage location brand short-term our growth a excited space so our create with a we for

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updating earnings expect our our a open doors forward and few on to on progress next we to you look We call. in months, our

front, launched attract platform, which with products from us a in us online allows to range effort BXB and can our through share new approach. partnership wholesale an a wholesale On of an partnership expand an brick-and-mortar to and the implemented and presence recently order in that omni-channel we potential partners reach customers

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interact to by additional our onward provide for are any included not in channel next opportunity we we’ve forecast, While and P&L the incremental our an wholesale in products as encouraged our this for channel customers will sales year person. impact with

brand to experience partnerships brand-accretive expand to and around build quality customers digital fuel continue synergy opportunistic be channels. leveraging person, way to reach existing and will awareness profitable between in way wholesale We while will a our our and in a of infrastructure and allow that capital-efficient products feel in and the physical

on progress the our it growth over quarters We will initiatives. our continue to update several as relates you all next to

consumer our demand rates, of are loans, choppiness pressures our in as and continued XXXX near return ongoing rates like a in of volatility. guidance inflation, well interest as we the term, related of as expectation to reducing elevated In full-year result student anticipation ongoing macro

remain disappointed managing focused are drive closely adapting awareness. QX results we our discretionary we on to brand and changing and behaviors, inventory, lowered outlook, expenses While continuing to customer with

our sales of corresponding improvement as margins see to to recover, fixed we in a and expect profit begin costs As trends leverage. volumes stabilization a

to key turn and Mark? efforts last share over the to like technological Mark Officer. throughout analytical and an I’d and the Now, He on update Vos, President underway. Information currently call will quarter our operational, Chief

Thank you, Crystal.

start customer the she like and I’d us how an our with First, update on to interacted quarter. during by providing

XXXX while was the sequentially of New end million a end to of transaction QX QX X% QX we had respectively. X.X end counts customers and and year. representing last compared at XXXX, XXXX, of the QX the million decrease At units and X.X to were X.X X% repeat year-over-year, decrease, QX a per of QX million a from XXXX, at compared in customer down active up

marketing direct first overall percent from efficiency while awareness strategy to efficacy our within of consumers marketing, remain us the to performance to overall as a contribution term. This to and ranges long order and brand brand from efforts our customers of spend profitable. margin over the the targeted environment, spend more marketing have marketing shift Lulu’s more the Lulu’s strength quality we products hug. more are effectiveness and macroeconomic leveraging our perspective, of of our that redoubled retain the to We a the to capture of dynamic in continuing end, challenging To marketing Lulu’s and affordable and allows marketing revenue introduce the our improve keeping response brand, to of this investments

marketing. Despite reach, influencer marketing, voice path. new our Based ambassadors and the to have challenges share in familiarity, Lulu’s us spending word-of-mouth top-of-the-funnel our year-over-year customer the cost we’re and in the data gains provides increase investments improved channels tracking, discretionary on impressions multiple and we brand’s confidence on Lulu’s generated which and in seen the brand our media we brand that continued the in with acquisition, and brand social growth continued of earned the of across support and media value right customer more

continue potential data-driven build test ahead see goes programs, attracted many growth be everything XXXX Lulu’s rate and quarter-over-quarter with compared higher the We who by the creative to approach of we successfully learn, consistent on for to plan and XXXX. to do as and brand, used Lulu’s. Kudos much acquisition marketing customers witnessed at in to have these customer our new and a the us out teams, new to offense

Since shopping in test our discussed data launch countries method currency international we iterate expect time their international XX experience to for quarter, their mid-February, customers languages. continue friction removing can shop as over we where in international our local launch rates, our our has experience. on that and to many we this Last conversion and in over preferred improved the indicates of in shopping improve and customers improved local payment its

in particular, standard add cost some a quarter second option customers abroad. at shipping to lower the to we In adjustments made a

abroad. customers Lulu’s of With international shipping, step in experience opportunities encouraging signals cost line we international our Bringing savings. the from with first we the to our shipping free standard experience the lowered for domestic also more demand various thresholds shopping is on shopping more introduction the capitalize to see provide

We updated expose activations While and it regions. is still early also Lulu’s to days, improve more exploring other paid search select you the are brand on there. keeping prudently to efforts into we influencer hug look forward abroad, our in test and rankings targeted progress

products return behavior, QX of and an on year, purchases their our product the in attributed target we increase that last our at a leading return Crystal to propensity their industry-wide. and have under seen play, higher seasonality. fitting macroeconomic a there are using QX can return decision majority unique become increase more higher higher as the a within to items discerning in to Lulu’s, multiple comparison more Customers earlier, and shift we home inherently be room. to dresses, have customers this towards the external have contribute not have Moving to level demographics comfort like that more to believe products selective to And keep. of as pressure around less of being in product factors in to are return appear tend Furthermore to rate. which a in Increased mix return noted due which rates in year-over-year, rate to are

consider will as taste said, are We That are see showcase experience. there the in quality of an opportunity returns and product to integral counter generally to have and better, we customers’ embrace the online we taking for and are making Lulu’s increases our more and of to and continue we selection, improvements style value, actions and returns costs. and an understand shopping it related it the part also

for to providing customers improving products more product customer fit our We focus that continue will make experience so information the on best and selections relevant can and the themselves.

keeping policy the continue to get to while for improvements, return our also brand to monitor low. introduced barriers further Lulu’s the We

vast rates flexibility possible, we increase expression the customer fit in satisfaction where and return to and optimize sizes, positive Additionally, good the our Lulu’s product various a fit working sales, which we working on of are could to product Since of a in way. XX% category, these up effect across makes the believe our impact our to changes we brand sales. majority are depending to position of across

further perspective, network, operational we California also robotics In distribution Northern in are our carriers. us In by we performance. to From And improve with launch, have QX, track live improvement we May, and an and diversified achieve goals. have labor fulfillment we seen variable carrier other some outbound the operational allows increases outbound productivity our productivity efficiency their working we went our center. on improve, to which our costs of to offset continued in since shipping shipping

across also working our reduce to margin. are actively shipping to network costs We return optimize

the AI around speak Given AI, not I remiss and excitement would to our support to be about how business. uses drive Lulu’s

been of has advantage. Lulu’s using our AI to years, it various and many across has been contributor a critical For business, successfully our aspects believe competitive we

models inventory AI example, recommendations, core well customer fit and our has lifetime product optimizations. around replenishment to For and our our model, as data predictive been allocation as reorder value,

and of support for interactions. product With the discovery AI capabilities, experience, rapid the creative our us enhancing evolution outfitting of we ahead inspiration customer see the further generative example, offering opportunities our customers improve by during to customer

in opportunities product summarizing see and customer from generating process, enhancements, ranging efficiencies marketing development also for improving our productivity campaigns. feedback We

keep ever also issues both the it will generative follow are can, And specifically our we AI, Several the where as to customers, benefit. own protect our our opportunities. I we evolving as explore where property, relates as to we see how new to surrounding landscape as can We you we to IP. well testing learning and intellectual exciting of areas avoid investors examples these and gave employees our are informed legal

who all and superior customer evolving. drive always and laser-focused am to costs. relentless our Our are support, are voices passionate all teams data LuCrew, operations, I of remain engineering finding done. experiences unit and in, our down Thank in well on talented proud you, customer and and delivering ways

it now, Financial Smith, deep over And I’ll Officer, hand dive to to into Tiffany Lulu’s Chief financials. our

afternoon good everyone. Thanks, Mark and

While sequential In our short revenue, in improvement QX decline net in line quarter well compared to margin trends revenue demand encouraged revenue in sequential improving net we monthly year-over-year rate and and saw of fell we expectations as progressed, signs an improvement a rate, by year-over-year our top gross our early return lower in of to are mostly observed quarterly the lower spite spread consumer with stabilizing our QX, higher-than-expected rates. XXXX. in double-digit of as QX as comparisons attributed of net

$XXX to $XXX, in and product XX% of higher second total down for year, net the value average respect of prior was order year-over-year, The short markdowns With to decrease our primarily decrease the and to revenue compared fell in which returns. discounts expectations a was our driven million quarter by results, XX% the modest X% quarter. a orders of decline

return higher quarter. as prior observed overall an rate the was monthly in the quarter the product shift return the we our While mix explained improving during in our quarter primarily progressed, year, year-over-year by second spread than rates

by the Gross year the last XXX margins second for basis from quarter points declined same period to XX.X%.

basis as expectations, a QX period favorability to result was factors: and markdowns below partially period. shipping increased margin offset declined normalized related same outbound improved slightly and higher higher pre-pandemic gross our facilities. was with Compared still costs, applied in XXXX, and line more and last by While to sequentially was points margin a XX.X% to return several materials This costs. burden freight and inbound it discounts, in XX.X% gross by distribution from XXX year, of depreciation the

unusually high. ability environment. for to mix XXXX quarter promotional For sales, our sales discounts price, of and at XX.X% net and were and of our pre-pandemic the to in when compared our XX.X% a historical and QX agility at more Markdowns to sales comparisons represented of second the of normalized model of X.X% XXXX discounts buying markdowns represented highly navigate a macro full period, challenging QX reinforcing sales

XXXX $XX.X selling insights spend marketing in higher P&L brand give lower million by focus expenses into to the some on merchant as and QX from fees, brand down favorability about partially QX million, awareness. marketing to marketing items. and down were increasing continue XXXX due to $X.X expense performance spend Moving line offset processing we

and expenses higher $XX.X across expense primarily increase was hiring $X the from $X was reduction issued through $X.X support cost by end million in payroll million related and and variable optimization customer to in and strategic benefits, labor sales initiatives in million of a due including QX offset awards resulting This for and equity-based center increased The key to General million costs by volumes $X.X relative about areas. favorability, XXXX. QX administrative departments. variable million to fixed our distribution to lower

Interest expense $XXX,XXX for QX the quarter $XXX,XXX in versus amounted to XXXX.

the we earnings EBITDA the compared diluted a million. second EBITDA adjusted reported decrease quarter in quarter of second per was $X.XX, XXXX quarter, for $XX.X For per diluted $X.XX $X.X million of QX to $X.XX XXXX. to share loss And of share the compared finally, of so of the of adjusted

XX% Our in last QX margin was period same adjusted the to compared EBITDA year. X%

sheet near-term growth $X $XX a net remains to with in resulting will balance Our debt We cash of to million. million and the of repaid down. during quarter and of We manage long-term balance about and the revolver, execute us it macro continue $X roughly of the our quarter well our second and strong plans drawn pay positions uncertainty. through million on revolver million $X ended

the net debt end year to with than of less $X million. expect We

million sequential quarterly Our period last million, about $X.X inventory at $X.X quarter-end from down same on balance million and basis. was year a the down $XX.X

by growth our second our that approximately improve are XX from inventories points sales. better basis becoming XXXX, sales spread quarter, indicating to with the QX inventory During aligned growth our we saw

do we accounted contemplated sell-through $X spring to season. not whose want includes markdowns and the range. inventory comfortable for bought balance season larger that have have lower a residual not new end into the our did approximately that are our our materialize more aggressive test within of inventory, product by margins of for sold we the selling expectations, of to realized remaining position, guidance is at we While it million We current that note with spring/summer

believe As we we’ve a industry-leading with highlighted before, what brand we are quick-turning turns. are

a and While little year our while still inventory this margin we ideal turns to continue be range true, normalize, slower do inventory than our improving as to prioritizing sales that anticipate results. remains LTM turns

a assortment fast-fashion brought seasonless margin and and concept. integrity. inventory company, back carry sold brand move be be our after As and a inventory to Approximately can to the us way current levels are one and which reminder, gross of we minimizes year the risk instead preserves not our year in ability is from next ultimately round, confidence through This of half fresh many further year. markdowns, but gives multi-season, season that remainder in fashion the a can a is reduces

disciplined As relentlessly and be to we always, we of balances minimizes that pursue continue customer to the risk. optimization in our and levels aim inventory management inventory approach, markdown further will experience

from the to consumer a pressure increasingly on actions continued and Moving consumers adapt make traffic demand less rates as industry, on to resuming mounting quarter, loan and we to interest costs, changing purchasing in gross behaviors, factors, operational including macroeconomic student to choppiness pockets near-term related higher of payments, forecast manage risks still in behavior, notable drive guidance, targeted it improvement to with we consumer consumer efficiencies interest while combined taken to trends. and predictable difficult early and made margins. to see of third investments environment have continue with The have the well continuing promotional series in inflation, as in

the we are of result a guidance. reducing volatility, full-year our As XXXX continued

to revenues XX% now compared full-year million $XXX represents XX% XXXX $XXX between We XXXX. to expect decline to net a million, which

be between margin compared adjusted to full-year adjusted EBITDA and XXXX rate represents This to XX% $X million expect We XXXX. of which decline X.X% X.X%. to $XX equates EBITDA an to and between million, XX% an

channels distribution activations. expanding Our incremental support including EBITDA revised in-person captures adjusted longer-term investments initiatives, in and broadening of guidance

see favorability, outbound attributed merchandise to rate of return improvement higher margins by cost expect in shipping to costs. half second our year-over-year year, offset gross margin the shipping continued and comparisons higher in partially continued We the

revenue past, don’t above as likely EBITDA we net our our full-year range, or on an and guidance that revenues fluctuations margin this With expect depending rates that be the expectations have will quarter modeling destination, net not fluctuate a the typically adjusted holiday below smallest seasonal for and as quarterly have In our QX purposes, exception. we our are explained we gifting is to quarter. year similar

to with unlike QX. years, and in revenues However, adjusted anticipate with be margins in net more prior EBITDA line than we QX QX

of debt paying average leases XXXX following and our As interest full-year IPO, down of long-term expense incur to higher revolver which a the we anticipate of rates impact associated million, our our an reflects interest We for XXXX approximately levels result be offsetting levels, distribution revolver equipment expense lower $X.X modest interest for with facilities. balances. increase compared to the

have today, positive that plan continue anticipate down of XXXX As free in paying our we will able ending debt and $X million cash maintain with anticipate XXXX a our We We we than balance less $XX of on revolver million. be drawn $XX net million macroeconomic the flow revolver. to challenges. to despite

Stock-based QX compensation quarter from was up the XXXX. million $X.X for

of expense approximately in million to forecast compensation million $XX XXXX. to stock-based $XX continue We

of expect XXXX, For count approximately million fully-diluted XX shares. we a average share weighted

on capital further capital between for focused invest new customer for efficiencies. as opportunities, to million stage investments. well the and setting and remains as $X includes which the to enhancing other on expenditures growth our We Moving remain year, operating the $X for future driving million retail expenditures, store, experience our plan

in capabilities, invest to distribution drive and robotics automation expected to further which will labor are center We efficiencies. continue

remarks. closing with And to Crystal pass I’ll that, back for it

continue delighting Lulu and their our I’d fans, thank for shareholders you, towards brand to a our like our strategy take Board the crew, each work to customers. moment continued to support and long-term of on executing Tiffany. you, as Thank the we

With that, over turn I’ll it questions to now.

your from Instructions] Goldman question Roach line Brooke comes And Please with Thank proceed Sachs. with first our you. of [Operator the question.

thank assumptions taking in that’s our regarding trends you for sales. in initiatives bit seen to influenced the engagement update half regarding Crystal, for place little view more if environment could the the could and Thak second with what you secondly, so then I have both brand? you consumer very own that I and provide your question. quarter-to-date hoping detail afternoon. Good a macro idiosyncratic made how in drive you that the much your you’re Tiffany, that much. you’ve of And wondering you the was sales competitive was broadly you’ve And on and the us seeing guide

for for the even the albeit intensive questions. to an ago, Hey, to changed to that point, entry now are those the And and Brooke. day looking few the to surveys our from customer quality especially Thanks where where of See, of our luxury see practices or really going long-term. competition accommodate compete hyperfocused, every business we’re that base, from on products focused positioning we fast brand and for just business in and in What type can’t to say, to believe any environment the fashion we’re attainable I competition, would enable we really And seeing certainly competitive not they in a compete more awareness our it change years price. mix. lower willing that has our reinstating I think business really that race and for customers. That price would is fashion at Lulu’s. are a we that’s candidly to continuing build our bottom disposable and in than really awareness we’re the looking for exit said, or quality model more win

for value that’s proposition in be customers. So where the that in focus reinforcing our our will near-term,

to a starting relative in prior that we is student September with revenue in our more educated, resumption is were we current little regard given the we’re Z, loan we where your our it’s think wait something Brooke, college think in that heavily account change that they would factored the their that for Tiffany. and the and the latter towards assume going lowering do macro to guidance hi, biggest, that of expecting payments to we’ve the needed faster QX. to guidance, Gen guidance the year, With to of question customers taking about be largely environment the a is impact we balance that millennial, into feel part that and say, interest of so and the will in factoring regard the QX impact are I that into contemplated in for an us and terms discretionary we to spend,

regard certainly demand lower to overall. that’s with in So factored just

Given what of rate do in for we saw higher with in mix conservative dress that partly But the quarter. return saw also we in a to estimated year attribute second with product well. than that the return balance we second did originally the we extra quarter there, to layer higher rates, mix higher a to as be regards the

much. on. very it will I pass you Thank

And our question Stichter next proceed your Thank BTIG. Janine question. is Please with you. from with

Hi, A on or when Tiffany. cautious marketing think be want you’re thanks So promotional Thank pull on half spend know about margin the promotions, to the for the roughly the the thinking half year? back back just promotions up balance more of we gross do into back of do still And sometimes pulling margin. question you the about versus the I my the you more for for lever the you a marketing little compensate? ramp you to philosophically, of how year? then gross – bit half to flat how you. Are the back taking I hear you’re the about to looking question.

Good Janine. question. Thanks, Sure.

already a basis improvement QX and the the on of improve margin to QX and our We be, overall X we as we are from see expect performance. QX. half the to we of call, continue on for back year-over-year QX, did into for QX, with gross back into good So margin half – each weeks year, the noted gross sequential pleased

that positively us in to we’ve We that expect affect regards effect continue initiatives in That since QX. in definitely will continued shipping cost not the QX, year some QX to this were see us to last those rationalization affected year. in gains done

discounts promotions spend, that mix and marketing to of the regards order balances in make our the to of determine lean With and into those. data-driven and always, trade-off the model to sort as do we right with expect, we

in which able this But somewhat and on expensive and heavily mix in time breakout case an as past, a be a being percentage continue needed. we of flex those may So when into that’s the leaned react not keep nimble been we’ve, terms what’s between promotions going discounting, as to historically, on those, but been quarter, more year going generally, little or the to try I’m provide the the QX to well. a to has explicit to of do in And market. marketing more that that we –

And on gross Great. then margin. just one more

You alluded earlier to you’re that on. some costing of the working initiatives

we when on And that? will to in are really see gross impact where we start margin? the Just

And more learn year. to be that expectation think not as be into something test we hard our of swing be overnight. going optimizations the way want too that kind I should to will we and there. it’s incremental It’s pronounced next into

We have a great team in place.

our cycles really so the given be our and about want current made excited cautious. far. to But progress buying model, We’re we’ve business we

and near-term, QX QX would in real year, So be the small to I will gradual. next say and start into QX we some see it benefits But will and there.

Great, of luck. thanks. Best

Thank you.

Thank you.

your with proceed Greenblatt Garrett from comes Jefferies. line Please question with next the question. Our of

for on like Hi, thanks color opportunity to just overall. wholesale mentioned. my some about and thinking strategy longer-term get how for guys. curious more that kind I’d I’m you you’re partnership taking about of the that the question,

we it’s you received But acceptance will And to continue for we’re say the initiative guys with for a positive, the it’s internally. and the customers us new very details we pleased to near-term, products. are an excitement and recent look carry channel don’t little as very the still because I fairly or awareness brand this a person. from our profitable and been our product with exciting in that want partners I to But us. update for In to specifics matures will opportunity a engage at again, it looking the bit. we’ve that share as our

thank Okay, you.

comes from And our proceed question you. Thank line Please with Kim the next your question. with of Cowen. Jonna TD

for Thanks my taking questions.

know I you XQ much. quarter. it – non-dress I about during about know other? about any the curious little And see Just just month-to-month trends And customer the very is performed saw during you heavy bit the how season, seasonally one quarter. slowdown you curious Thank in group a did dress talked that but versus you outsized

Hi, throughout a Jonna, just basis. to progression I’ll monthly we with regard this is QX saw that Tiffany. speak just on the

the XX% through rev monthly our did comps QX about as quarter. year-over-year, year-over-year see down were While we very we progressed net improve gradually comp overall,

were So April, And May, XX.X% we about down for on example, down basis. a under we XX%. down XX.X%. just were June, we year-over-year were

So, progressed. Mark, some specific customer any additions. know, don’t I as improvement have there the quarter you if

across look we when board, So at any it household and see incomes, behavior. the that perspective from specific out stand in that say, of, did let’s similar changes the was then we segment more not

that there report to nothing was been out. there has so called And

more what From perspective, expected casual our expectations, and casual use separate of to underperformed our end a more specifically, customers where a underperformed are from looking There for and and end a had to we assortment product more months basic use. really novelty. essentials our our are newness couple that separates

So just pivoted to we’re by our aren’t our expectations newness, That’s team’s not not seeking quarter. weeks, actually recent performing. our right say more the towards pivot very products month, more assortment performing encouraged novelty now. as They what more the weren’t especially ability we more for up those other the and to towards in customer if is to

So we’re pivoting actually of made in is assortment we’ve progress the happy for. looking more what towards she about the towards QX

Alright. Thank you.

Thank you.

Please next line the of with Bank question America. with from Alice proceed of comes question. Xiao your Our

thanks taking Hi, my for questions.

between also interesting now conversion margin domestic And what get I structural can Can seems think you about there think right international time? international sales? an big be domestically? like look versus you Is to rates difference and do over international a opportunity. how talk internationally

Great questions.

as barriers really international the removing so that spoken us about percent is and we’ve – about the very right And of had. do a revenue we friction small. – we So for still now

we can now feel that And place a revenue. that that start so building we we’re in good

the lies last the and domestic, years relates the lot we domestic, this on thus experiences several and the where then at to iterate lower data being have far, over for the and yes, a of not conversion it and that’s time spent international opportunity international in that point us between certainly focus we than As see with because also component. that international rate difference a to is there

So to over we build out. opportunity, out time revenue that look you and growing pointed as forward the

then over time, And how... it. Got

In the size of opportunity? overall of just terms the

right. Right,

any point, have stakes or put that communicated not or targets externally. this we At

there that we and We we opportunity feel best are comfortable would position get the friction look to we that. in – look is holistically feel place. how then to assessing from that we assess will that. we communicate all like, that look the what that we do a that without that capture if on, will needed how And first how opportunity. at And to And we at we could was

Alright, thank you.

Thank from question your proceed question. you. with comes And next Dana Telsey Please with our Telsey Group.

everyone. afternoon, good Hi,

which was of As the What it we the How – Thank level X% X%, was planning down AOV, think quarter. first seeing at from improvement look are you’re I that’s slight which rate? in down around return AOV, the you with balancing AOV? you. the and the markdowns in a

this Hi, is Yes. your for Tiffany. Dana, question. Thank you

based year. quarter. mix particularly to balance So the ended a we bit progress the through the come AOVs were into Largely, we the well see pretty expect down be of as And typically, it to typically we we are We pleased that during with start of product where bit quarter. promotional. AOV the lower as on more would a QX, move as

was it planned of return around similar there. have rate? the what accordingly, may to seen And years missed your in terms we I cadence So prior in it we’ve other question,

Yes, exactly.

bit generally in QX. picked rates, speaking, Return a Yes. up

rate very balance still the mix, We for what it mix have on so the during to been year. still [XX:XX]such [indiscernible] fluctuates of That categories dependent of more expect be the dress was heavier But product in year. product QX. terms we in the return

bit example, half more them in back last what year. were But they than expect to forecasting for the back see to would of we’re QX, return elevated still So come we rates down. be a

plan marketing introductions? and Got then it. third be you fourth year’s of brand year, you. campaigns watching that quarter last product quarter it’s for think the of you’re mentioned, anything we for, should doing? be compared may to and the execution? or half drive the you’ve Thank same as different conversion, out basically as And you parsing to whether awareness as back do How what Mark,

of way. year. in the the similar overall kind we’ve be same, but done, of be compared test marketing in going not some towards reallocation to a the from of out of the I awareness that our specifically to more potentially, and to a increases performance initiatives will we I’d very model always and But support have. half spend what iterate it’s would the other it meaningful when the say monies store to of side first

Thank you.

Thank you.

that, this We reached today’s of the And session. question-and-answer with teleconference. have end our concludes

you lines your for time. Thank disconnect may You participation. this at your